Malawi – donors call for sacrifices to help economy

Everybody, including the privileged few, must sacrifice for Malawi to recover from the current economic slump, the Common Approach to Budget Support (Cabs) has said.

Last week fuel shortages hit the country again especially the capital Lilongwe a reminder that Malawi is yet to recover from the economic downturn
Cabs chairperson Asbjørn Eidhammer, who is also Norwegian Ambassador to Malawi, said this in an exclusive interview with The Nation this week.

The remarks, by a group of Malawi’s donors that provide harmonised general budget support to the country—up to 30 percent of the national budget—coincide with The Nation’s revelations on Tuesday that President Joyce Banda’s trip to the United Nations (UN) General Assembly in New York in the United States will cost taxpayers about K308 million in air tickets and allowances for her and he 40-plus entourage.

Expenditure critics say this is a luxury the gasping Malawi economy and the tattered public purse cannot afford. Frequent internal travel with huge entourages by President Banda and her deputy, Khumbo Kachali, have also projected the image of an administration obsessed with visibility—even from mundane public events fit to be presided over by senior civil servants—at the expense of the larger population.
The Cabs’ call for sacrifice also follows Malawians’ anger at the recent 80 percent increase in Cabinet ministers’ accommodation allowances at a time the People’s Party (PP) administration is preaching austerity for everybody while the ruling elite live large.
With The Nation establishing that Britain and Germany will not give Malawi budgetary support until 2015, the administration may need to walk its austerity talk.
“Sacrifices have to be made and I think it is important from our [donors’] point of view that although we assist in mitigating those sacrifices and the negative impact particularly on the poor, everybody will have to be prepared to sacrifice and that goes in particular also for the privileged,” Ambassador Eidhammer said.
His remarks, although not directed at this week’s K308 million expenditure for the UN trip, may resonate well with sentiments on social media and other platforms that the leadership has to cut spending.
In an open display of opulence, Banda is reportedly staying at the Wardoff Astoria Hotel in New York, with accommodation costing between $1 500 (K450 000) and $15 000 (K4.5 million) per night, a far cry from expenditure controls government is preaching.
When Mutharika slept at the same hotel two years ago, he was widely criticised because at the time his government was implementing austerity measures to rein in on expenditure.
Eidhammer, whose country is one of Malawi’s leading donors and is among the few intending to contribute to budget support to the 2012/13 budget, said, however, that most donors are impressed with the bold steps Banda has taken to put the country on the recovery path.
He, however, cautioned that the recovery will take more time “because it is not an easy thing to do.”
“We have seen how Western countries are struggling to get recovery in their economies; so it takes time, it is not an easy thing to do…I do not agree necessarily with those who are criticising government for not getting its act together,” he said.
In an apparent response to comments by both the Minister of Information Moses Kunkuyu and Finance Minister Ken Kandodo that it is time for donors to act on their pledges, Eidhammer said they have stuck to their timetable and budget support as agreed.
“I would also like to correct the impression that the donors are not coming forward. Some large donors have fast-tracked their support in main sectors and programmes to mitigate the impact of the economic situation on the less fortunate are now in place. Budget support has so far been released in accordance with what was agreed in the CABS review …” he said.
President Banda has in the last four months also tried to win Western support by rolling back Mutharika legislation seen as suppressing human rights.
She also devalued the kwacha by about 49 percent against the dollar and removed the currency’s peg against the dollar, which has seen the local unit depreciating further by another 20 percent. Banda has also liberalised fuel prices, water and power tariffs, a move that has seen rates rising dramatically. Read more…